For the two of you who didn’t follow the advice in the first paragraph: I’m going to let you in on a few reasons why Twitter isn’t Facebook, despite the comparisons. While the two have always been compared -- not always with good reason -- the Twitter vs. Facebook analogies are only going to grow, now that Twitter plans to have an IPO.
That’s kind of stupid, actually, but so are people who didn’t realize that, at the time Facebook IPO’ed, it didn’t really have a stable business model.
I could go on, but let’s get back to why Twitter shouldn’t be compared to Facebook. Here, then, the reasons why (and yes, I’m comparing!):
1. Twitter’s valuation -- based on the secondary market -- is somewhere between $15-20 billion; Facebook’s, at this writing, is over $105 billion. (BTW, Facebook is currently at about $44/share, sustaining its recent streak of actually trading above its $38 opening price.)
2. Twitter has about 240 million users; Facebook has about 1.1 billion. Don’t let Twitter’s buzz fool you into thinking that it’s bigger than it actually is. (Though 200 million actives is nothing to sneeze at, and the very public nature of the platform, compared to Facebook, gives it outsized swagger. )
3. Twitter is real-time; relatively speaking, Facebook is not. When it’s time for a big sports or news event, or awards show with people wearing freaky outfits, you want to be on Twitter, don’t you?
4. Twitter has definitive links to TV viewing habits; Facebook does not. My favorite study of the year: Nielsen’s Twitter Causation Study, which connects the dots to prove that there’s a connection between the number of tweets and the number of TV viewers.
So, in essence, Twitter is its own thing, and its IPO won’t be Facebook IPO 2.0. (Not that anyone wants that.)
In fact, over time, I expect Twitter and Facebook to go in quite different ways. While I read somewhere this morning -- apropos of the IPO -- that Twitter had more growth potential than Facebook, I don’t really expect that Twitter will ever approach Facebook’s scale. Ask around your set of real (i.e. not social media-obsessed) friends, particularly of a certain age, and you’ll discover that they’re not on Twitter, but they are on Facebook. The time for them to join Twitter en masse seems to have come and gone, unless Twitter’s value proposition radically changes.
But Twitter has strengths that go deeper than user numbers. Unless Facebook were to radically change its value proposition, Twitter is the real-time platform. It’s phenomenal that Facebook can use its algorithms to surface posts we wouldn’t see if Facebook, like Twitter, posted everything chronologically. However, the immediacy of Twitter is what makes it so compelling, and what makes it so attractive to advertisers. It’s a much better platform for tapping into the zeitgeist.
And then there’s TV. Perhaps that fourth reason the two are different seemed out of left field, but if you’re in the media business, you may get why, in fact, it’s centerfield. There is no other platform so closely connected to TV -- and TV, boys and girls, is still where the big money is in advertising. This year’s ho-hum upfront only got U.S. broadcast networks a lousy $9 billion!
What does that have to do with Twitter? A lot. As has been already happening, media companies and advertisers are going to continue to exploit this connection. What better way, in a fragmented TV landscape, to tie the most powerful medium ever to the digital world?
So now for that ballyhooed investment advice. Would I invest in Twitter? Yes, if I had the money, and as long as the IPO reflects that Twitter execs know what Twitter is -- and what it’s not.